Cinema City International announced today that is has acquired the Palace Cinemas’ chain.

The acquisition makes the CCI Europe’s third-largest distributor, the company said.

The €28m ($38m) deal comprises 141 screens in 15 multiplexes in the Czech Republic, Hungary and Slovakia. It increases CCI’s operations to 866 screens in 90 multiplexes throughout Central and Eastern Europe and Israel.

“Today we took a major step forward on our path to consolidating our position as one of the leading cinema operators in Europe,” said CCI CEO Moshe (Mooky) Greidinger [pictured].

Greidinger added that CCI plans to upgrade the newly acquired cinemas in the next two years to meet demand for 3D digital movies.

The integration of the company’s organizations in the Czech Republic and Hungary will benefit CCI’s cinema advertising business, Greidinger said.

In the deal CCI acquired eight multiplexes with 65 screens in the Czech Republic, plus an eight-screen multiplex to be opened in the city of Ostrava in 2012; four multiplexes with 47 screens in Hungary; and three multiplexes with 29 screens in Slovakia.

In 2010 CCI sold 30.5 million tickets in six countries, 11.1% more than in 2009. 

The purchase price represents six times the normalized EBITDA of the acquired companies for 2010. At the closing, CCI paid €21.4m ($28.8m) to the seller and assumed €6.6m ($8.9m) in existing debt of the acquired companies. The acquisition was financed from CCI’s existing cash and from available credit lines.